Yes, they shipped a Windows Phone in 9 months. But Windows Phone 7 was a pretty horrible beast and deservedly boomed. Have you seen the "why Windows Phone sucks" list? It is mostly a list of features the phone should have, but doesn't. Here is one: www.thinkdigit.com/forum/mobiles-tablets/156824-a.html
Much of that list arises because Windows Phone 7 is based on CE. Windows Phone 8 is based on a decent OS and you would expect that list to disappear with time, but right now Windows Phone 8 is so new there are no apps that take advantage of it. My guess is it will be at least 2013 before we see the product Nokia needed when they abandoned their Unix efforts.
Oddly, you are right in a way. In effect Nokia has all but stopped selling smart phones for 2 years (so far) as they make the switch to Microsoft, and one reason is Microsoft didn't have a competitive product to sell and they still don't.
And yes, Nokia was hopelessly late with their first release of their Unix phones. But the phone they did release was miles ahead of Windows Phone 7 feature wise, and as the story pointed out, it was amazing how fast the Linux team moved once the politics was cleaned up.
It's impossible to say what would of happened if they had of continued with their in-house software instead of Microsoft, but it is hard to see how it could have been in a worse position than the find themselves in now. And if they had of pulled it off, they would have found themselves in a much better position. They would have been in control of their own destiny, making money from selling apps from their own app store, for a start.